Finance union backs Sinn Féin Bill to limit mortgage loan sales

The Financial Services Union (FSU) has come out in favour of a Sinn Féin Bill that would prevent banks from selling home loans to so-called vulture funds without borrowers' permission.

"This seeks to put on a statutory basis what is recommended as best practice by the Central Bank code of practice on the transfer of mortgages and we call on all political parties to support this Bill to help protect borrowers and as a small but necessary step to resolving the housing crisis," said Gareth Murphy, acting secretary general of the FSU, which represents about 15,000 finance workers in the Republic and the UK.

While Sinn Féin finance spokesman Pearse Doherty's No Consent, No Sale Bill 2019 passed an initial vote in the Dáil in January by a majority of 80 votes to 45, figures from Central Bank governor Philip Lane to Department of Finance officials have argued that the draft laws would hurt the financial system if enacted.

Permanent TSB chief executive Jeremy Masding told the Oireachtas finance committee last week that the proposed legislation would make it more difficult for banks to repair their balance sheets and attract "efficient capital", or increase competition and reduce interest rates in the market.

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Code of practice

The Central Bank told the committee earlier this month that it plans to scrap its code of practice on the transfer of mortgages, introduced during the financial crisis, as it is “not relevant” in the current banking environment. The code states that a “loan secured by the mortgage or residential property may not be transferred without the written consent of the borrower”.

The Central Bank has argued that laws introduced since then have given the regulator powers to supervise both the owners and servicers of mortgages that have been sold on by banks.

AIB agreed late last month to sell a distressed investment property loans portfolio once worth almost €3 billion – which also included about 220 owner-occupier loans – to a consortium led by US distressed debt giant Cerberus. The bank, along with rivals Bank of Ireland and Permanent TSB, also indicated to the Oireachtas committee last week that further non-performing loans sales will be initiated before the year is out as they seek to lower their bad debt levels.

Meanwhile, the FSU said it is "concerned" about a proposed European Union directive that promotes the development of a secondary market for non-performing loans. "We do not want to see this good work being done in the Dáil and by our members being undermined by an EU directive which sets the agenda of light-touch regulation of vulture funds or could even overrule domestic legislation on the matter," Mr Murphy said.

"Having more secure bank balance [sheets] is important but not at the expense of consumer rights and definitely not in a way that might exacerbate the housing crisis here in Ireland. "